Submitted on February 12th, 2009 by Unregistered user (not verified)
Now that there has been a year since your analysis of the food vs. fuel issue please explain the disconnect between ethanol prices and corn prices that currently exist.
see the following from the NY Times
ETHANOL: Industry struggles to stay afloat in weak economy (02/12/2009)
Lawmakers' goals to convert vast amounts of plants and agricultural wastes into automotive fuel are in serious jeopardy barely a year after they were enacted as decreased demand amid the economic downturn and excess capacity are shuttering plants virtually every week.
Meanwhile, the tiny branch of the industry that would convert biomaterials such as wood chips and crop waste into fuel is also stalling as plans for a new generation of factories are cancelled, and the industry admits it has virtually no chance of meeting Congressional production mandates that kick in next year.
Only months ago, refiners in some regions were buying up as much corn ethanol as they could to blend with expensive gasoline and bring pump prices down, and investors seemed to be lining up to put money in next-generation biofuels plants.
But since July 2008, oil and gasoline prices have plunged, while the price of corn has remained relatively high. Refiners are limiting their ethanol purchases to a level required to meet federal blending mandates -- far below the industry's capacity. And private investment in advanced biofuels has plummeted since the economy went sour late last year.
The Energy Information Administration has estimated the industry would fall short of congressionally mandated targets for expanded use of ethanol and other biofuels that were enacted in a 2007 energy law.
Energy experts project national gasoline consumption in 2009 and 2010 will be 6 percent below 2007 levels, and future ethanol production targets could represent more than 10 percent of gasoline production. Regulations require a 10 percent blend limit for ethanol in most gasoline, meaning there would be no place for ethanol production to go.
"The ethanol industry is on its back despite the billions of dollars they have gotten in taxpayer assistance and a guaranteed market," said Amy Myers Jaffe, an energy analyst at Rice University.
Sen. Jeff Bingaman (D-N.M.), chairman of the Energy and Natural Resources Committee, said Congress may have to rethink the targets (Clifford Krauss, New York Times, Feb. 12). -- KJH
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If corn prices are driven by ethanol demand, what's up now?
Submitted on February 12th, 2009 by Unregistered user (not verified)Now that there has been a year since your analysis of the food vs. fuel issue please explain the disconnect between ethanol prices and corn prices that currently exist.
see the following from the NY Times
ETHANOL: Industry struggles to stay afloat in weak economy (02/12/2009)
Lawmakers' goals to convert vast amounts of plants and agricultural wastes into automotive fuel are in serious jeopardy barely a year after they were enacted as decreased demand amid the economic downturn and excess capacity are shuttering plants virtually every week.
Meanwhile, the tiny branch of the industry that would convert biomaterials such as wood chips and crop waste into fuel is also stalling as plans for a new generation of factories are cancelled, and the industry admits it has virtually no chance of meeting Congressional production mandates that kick in next year.
Only months ago, refiners in some regions were buying up as much corn ethanol as they could to blend with expensive gasoline and bring pump prices down, and investors seemed to be lining up to put money in next-generation biofuels plants.
But since July 2008, oil and gasoline prices have plunged, while the price of corn has remained relatively high. Refiners are limiting their ethanol purchases to a level required to meet federal blending mandates -- far below the industry's capacity. And private investment in advanced biofuels has plummeted since the economy went sour late last year.
The Energy Information Administration has estimated the industry would fall short of congressionally mandated targets for expanded use of ethanol and other biofuels that were enacted in a 2007 energy law.
Energy experts project national gasoline consumption in 2009 and 2010 will be 6 percent below 2007 levels, and future ethanol production targets could represent more than 10 percent of gasoline production. Regulations require a 10 percent blend limit for ethanol in most gasoline, meaning there would be no place for ethanol production to go.
"The ethanol industry is on its back despite the billions of dollars they have gotten in taxpayer assistance and a guaranteed market," said Amy Myers Jaffe, an energy analyst at Rice University.
Sen. Jeff Bingaman (D-N.M.), chairman of the Energy and Natural Resources Committee, said Congress may have to rethink the targets (Clifford Krauss, New York Times, Feb. 12). -- KJH